The passage of the House Bill on sin taxes (final part)

The smart strategy consists not only of having a response to the thin and tired arguments of the tobacco monopoly. The tobacco monopoly raises the specter of lower revenues, but it ignores the inelasticity of demand of tobacco and alcohol products, thus generating additional revenues despite tax increases. It warns about the rise of smuggling, but it fails to appreciate that illicit trade is mainly a function of administration reforms and good governance. It is concerned over the loss of jobs of tobacco farmers, but it turns a blind eye to the fact that farmers can easily shift from planting tobacco to producing other crops, and in fact have done so through the years. In addition, the reform bill earmarks a huge amount for the safety net and alternative livelihood of tobacco farmers and workers.

A smart strategy is also about convincing the stakeholders, including the politicians, that the reform is a win for everyone. In particular, the reformers have presented the sin taxes as primarily a health measure, and that the health and revenue objectives go hand in hand.

An updated study (2012) of Tony Dans, M.D. estimates—and he is careful to say that this is even an underestimation—that the economic burden (health care costs, productivity losses, and premature death losses) associated with smoking-related diseases in 2011 was more than six times the amount of the excise taxes collected for tobacco and alcohol in the same year.

The key message is that the sin tax reforms protect the poor and the youth. Raising taxes will curb smoking and excessive alcohol drinking. With the higher relative prices of tobacco and alcohol, the poor will either quit smoking and binge drinking or reduce their consumption of sin products. And with the budget constraint, they will shift their spending to essential goods like food and education.

The benefits are not only for the poor and the youth. The title of the manifesto in support of the reform bill is: “One bill, 200 votes and seven wins.” A win for the poor, a win for the youth, a win for health, a win for the economy, a win for tobacco farmers, a win for politicians, and a win for the future.

Yes, even the politicians will benefit from the reforms. And it is here where the advocacy harnessed the creativity of government champions like Butch Abad and Kim Henares.

The Bureau of Internal Revenue crunched out the numbers, showing how the amount of PHP 10 billion to be generated from the original Abaya bill would be distributed to the tobacco-growing provinces. On top of this, the original Abaya bill would have roughly provided each congressional district in every province and independent city an average of PHP215 million for universal health care.

Informing the governors and mayors about the funding of health programs in every district, which the Health Secretary did—prompted them to support the bill.

Such incentive, done in the most transparent way to inform everyone, is innovative. The people will benefit from the health programs, and the politicians will have to support the reform bill to gain the support and the votes of their constituents.

This kind of incentive, demonstrating how both the public interest and the politicians’ interests can be aligned, is a far departure from the controversial practices of previous administrations that simply rely on the opaque allocation of pork barrel funds to court the support of legislators.

The last but surely not the least crucial element of the strategy is the formation of a broad, yet flat and shapeless, united front of government and civil society.

The civil society coalition itself is wide and pluralistic. A radical group of tobacco farmers, which is against all forms of exploitation, joins some of the capitalistic local and foreign business chambers to counter the lobby of the tobacco monopoly. The Foundation for Economic Freedom and Action for Economic Reforms might have differing economic philosophies, but they have worked hand in glove to advance the sin tax reform.

The coalition includes the former finance and health officials who have not only contributed their reputation to promote the cause but who have likewise participated in shaping ideas and facilitating negotiations to have the reform bill passed.

A decisive factor, too, is the active involvement plus high visibility of the health professionals—the doctors of medicine, the health academics, the cancer survivors, the tobacco-control and other health activists. This is a far cry from previous engagements with the legislature on the sin taxes, in which the coalition was limited to the esoteric world of technocrats and academics.

Boyette San Diego, a friend of mine, said it well thru his Facebook message: “You know you’ve achieved a truly inclusive campaign when, aside from former department secretaries and major institutions and professional organizations, you’ve managed to sign up the UP Dragon Boat Team.”